This article is about the requirements to use scalping as one of your forex trading strategies.
The decision regarding the most suitable forex trading strategies for your trades is a very important factor in your preparation to trade in the forex market. If you like a fast method of trading with intense focus and you have the ability to assess one-minute charts, you should consider scalping as a strategy. With this strategy, you should not be afraid to suffer quick losses and you should have the ability to make quick decisions. If you have a personality type that needs to analyse every move you make, you should not consider this strategy at all.
Setting Up Scalping
Your first requirement when you set up your scalping strategy is to obtain a stable, fast internet service with a computer to match that speed. The next item you require is a trading platform that is reliable and will allow you to buy and sell your positions rapidly. A platform with easy-to-use buy and sell buttons would be preferable as you can then carry out your trades simply by clicking one these buttons.
For this strategy to work, it is critical that all your trades are executed at your predetermined level. This means you should ensure that you are aware of your forex broker’s trading terms. There are brokers that limit this form of guarantee to times when the market is slow. Some brokers offer no guarantees at all. There is a term called ‘slippage’ which refers to an order that is placed at a certain price, but is executed at a price a few pips away from the original price. As a scalper, you will not have the buffer to absorb these differences, along with the normal spread. It is for these reasons that you should be sure your broker is willing to guarantee execution of your trades at the rate specified.
Redundancy protects you from potential disasters. In this financial market it means being able to enter and exit your trades in different manners. This is where your fast, stable internet connection will come in handy. You should have a backup plan for those instances when you have an interruption in your internet connectivity. Another backup plan you should have is that you are able to make contact with your broker by telephone. You should know that your calls will be answered quickly and that you will be able to place your trades immediately. You may think that this is irrelevant right now, but when you are in the middle of a huge trade and you are blocked by unforeseen events, it will definitely raise your stress level and wreak havoc with your life and trades.
Forex Trading Strategies Charts
You need to have a system that is part of your daily life. You will not have time to undertake detailed analysis if your use this strategy. You need to have a trading system in place that you can make use of on a daily basis. To fulfil this, it may be necessary for you to do short-term charts. The ideal charts for your purpose will be one or two-minute forex charts. It is possible for you to use five-minute charts sometimes.
This strategy is most suited to the more liquid currency pairs, such as the major currencies. You should be aware of the most appropriate times to trade as the market volume varies during the trading day.